Workers compensation cost is based on your wages bill, industry classification, claims history, and state or territory scheme. There is no single fixed price because each state sets or regulates premiums differently.
As a broad guide, many Australian employers may see premiums around 1% to 2% of total payroll, but rates can be much lower or much higher depending on the industry, state, and claims history. A low-risk office business with $300,000 in wages may pay around $900 per year. A construction business with the same wages bill may pay $15,000 or more.
Safe Work Australia reports that workers compensation premiums are expressed as a percentage of total wages, and the Australian standardised average premium rate was 1.34% of payroll in 2021-22. Current state rates vary. For a full explanation of what workers compensation is, see upcover's guide to workers compensation insurance in Australia.
At a glance
- Workers compensation premiums are calculated as a percentage of total wages
- The main cost factors are payroll size, industry classification, claims history, and state rules
- Higher-risk industries pay higher rates
- Your premium can change after year-end wage declarations
- Employers with workers in more than one state may need to deal with more than one scheme
- Minimum premiums apply in some states regardless of wages
- The most accurate way to know your cost is to get a quote based on your business details
- upcover arranges workers compensation insurance for eligible Australian employers
How workers compensation premiums are calculated
The basic calculation follows this formula:
Total annual wages x Industry classification rate +/- Claims history adjustment = Estimated premium
For example, a retail business paying $400,000 in annual wages with an industry rate of 1.5% and no claims adjustment would pay an estimated premium of $6,000 per year. A construction business with the same wages at 5% would pay $20,000.
Each part of the formula works like this.
Payroll size
Premium starts with total wages for the year, including salaries, overtime, superannuation contributions, bonuses, commissions, and some allowances.
Work type classification
Your business is assigned a classification code based on its primary activity. Higher-risk work attracts a higher rate. A bookkeeper and a scaffolder are in different risk categories, and their rates reflect that.
Claims history
Claims frequency and cost can affect pricing, particularly in experience-rated schemes. Employers with fewer claims and strong return-to-work outcomes may face less premium pressure over time, depending on the scheme. Early injury reporting, safe work practices, and structured return-to-work support can help at renewal.
State or territory scheme
Where your workers are based determines which scheme applies. The same business operating in Queensland and South Australia would pay different base rates. If you employ workers in more than one state, you may need policies in each jurisdiction.
Example workers compensation cost by industry
For a business with $300,000 in annual wages, here is what the cost may look like across different risk levels.
Office-based work
Accounting, IT consulting, legal services, financial planning, administration. Rates typically sit around 0.2% to 0.5% of payroll. Estimated cost: roughly $600 to $1,500 per year.
Retail and hospitality
Shop assistants, cafe and restaurant staff, hotel workers. Rates typically sit around 1% to 2%. Estimated cost: roughly $3,000 to $6,000 per year.
Construction and trades
Builders, electricians, plumbers, concreters, roofers, scaffolders. Rates can sit between 3% and 8%, sometimes higher for demolition or heavy earthworks. Estimated cost: roughly $9,000 to $24,000 per year.
Transport and logistics
Couriers, truck drivers, delivery drivers, warehouse workers. Rates typically sit around 2% to 5%. Estimated cost: roughly $6,000 to $15,000 per year. These examples are indicative only. Actual premiums depend on your state scheme, specific industry code, wages, claims history, and insurer or scheme rules.
Some states apply minimum annual premiums regardless of payroll. For example, NSW has published a minimum of $240 and South Australia has published a minimum of $200. Check the relevant state scheme for current figures.
Want a figure based on your wages, industry, and state? Start with upcover's workers compensation insurance page.
Workers compensation cost by state
Each state sets or regulates its own average premium rate. These change periodically and individual employer premiums vary based on business and risk factors.
New South Wales
SIRA says the basic tariff premium is calculated from wages multiplied by the workers compensation industry classification rate. NSW has frozen premium rates at 2025-26 levels for the 2026-27 and 2027-28 policy years, although individual premiums can still change based on wages, business activity, and claims experience.
Victoria
The Victorian Government confirmed the average WorkCover premium rate remains at 1.8% for 2025-26. Individual employer premiums vary by business and risk factors.
Queensland
WorkCover Queensland says premium depends on wages and other considerations. Queensland has maintained one of the lowest average rates in Australia at around 1.34%.
South Australia
ReturnToWorkSA confirmed the average premium rate for 2025-26 is maintained at 1.85%.
Western Australia
WorkCover WA publishes recommended premium rates by industry class for 2025-26. Employers arrange cover through approved insurers, so final pricing can vary.
Tasmania, ACT, and Northern Territory
These schemes use insurer-set or suggested rates, so pricing varies by industry, insurer, and claims history. Check the relevant authority or use a broker to confirm current pricing.
Why your premium may be higher or lower than average
Six factors drive the difference between what you pay and the average rate for your state. Industry classification is the single biggest variable. A concreter pays a different rate from an IT consultant because the injury risk is different.
- Total wages declared. More wages means a higher base premium. Wage declarations should include all categories required by the relevant scheme.
- Claims history. Frequent or expensive claims may increase premiums in experience-rated schemes. A strong safety record may help at renewal, depending on the scheme.
- Return-to-work outcomes. Helping injured workers return to suitable duties earlier can reduce claim duration. Shorter claims may help reduce premium pressure over time, depending on the scheme.
- Contractors and deemed workers. Some contractors may need to be included in wage declarations depending on state rules. This increases the wages base your premium is calculated from.
- Wage estimate accuracy. Your first premium is based on estimated wages. If actual wages are higher at year-end, you may receive an adjustment invoice. If lower, you may receive a refund or credit.
What information do you need for a workers compensation quote?
To get a quote, you generally need:
- ABN and business name
- State or territory where workers are based
- Number of workers
- Estimated annual wages
- Industry or work type
- Business locations
- Claims history
- Whether you use contractors
- Preferred start date
Having these details ready makes the quoting process faster. If you employ workers in more than one state, you may need quotes for each jurisdiction.
How upcover can help
upcover arranges workers compensation insurance for eligible Australian employers with selected insurers and underwriters. Depending on your state and business, you may be able to compare cover options and arrange a policy online.
- 70,000+ businesses covered across Australia.
- 4.9/5 customer rating.
- Instant Certificate of Currency on policy confirmation, where available for the relevant policy.
For related guides, see workers compensation insurance in Australia, is workers compensation compulsory, and employers liability insurance.
upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.
Frequently asked questions
How much does workers compensation insurance cost in Australia?
Premiums are calculated as a percentage of total wages. For most employers, rates sit around 1% to 2% of payroll. Low-risk office work may cost 0.2% to 0.5%, while construction and heavy trades may cost 3% to 10%. The actual cost depends on your state, industry code, wages, and claims history.
How are workers compensation premiums calculated?
Premiums are based on estimated wages multiplied by your industry classification rate, adjusted for claims history and state scheme rules. Wages include gross pay, super, bonuses, commissions, and allowances.
What is the average workers compensation rate in Australia?
Safe Work Australia reported a standardised average premium rate of 1.34% of payroll in 2021-22. Current published average rates vary by state. For example, Victoria has confirmed 1.8% for 2025-26 and South Australia has confirmed 1.85% for 2025-26. Actual rates depend on your industry and claims history.
Why does workers compensation cost more in some industries?
Higher-risk industries have more frequent or more severe workplace injuries. Construction, transport, and manufacturing typically attract higher rates than office-based or professional services work.
Does claims history affect my workers compensation cost?
Yes. In many schemes, employers with fewer and less costly claims generally pay lower premiums over time. For medium and large businesses, experience rating compares your claims performance against your industry average.
Do contractors affect my workers compensation premium?
Some contractors may be treated as workers depending on state rules and the nature of the engagement. If a contractor is deemed a worker, their wages may need to be included in your declaration, which increases the wages base your premium is calculated from.
How do I get a workers compensation quote?
You need your ABN, estimated wages, number of workers, industry type, state, and claims history. upcover arranges workers compensation insurance for eligible Australian employers. Start with upcover's workers compensation insurance page.
The information in this article is general in nature and provided for informational purposes only. It does not constitute personal insurance, legal, employment, tax, or business advice. Workers compensation rates, premiums, and calculation methods vary by state and territory and can change. Rate data is sourced from published state scheme information, Safe Work Australia, and official government announcements for 2021-2026. Actual premiums depend on your state, industry code, wages, claims history, and insurer. Always confirm current rates with the relevant state or territory authority or insurer. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions contained in the relevant policy wording and Product Disclosure Statement. Before deciding whether a particular insurance product is right for you, please read the relevant PDS and consider your personal circumstances. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.
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